11
Apr
12

Generally, it depends…

Often in our line of work we need to give an opinion about how certain activities should be accounted for.  Our customers regularly provide as little information as possible while at the same time wanting a firm conclusion.  However, our opinions are only as good as the information we use to formulate them.  So when I’m asked a question about how an activity would be accounted for, I often start out my response with “Generally, it depends.”

There can be black and white conclusions, but the facts and circumstances surrounding the transactions are the key to determining the appropriate accounting treatment.  Change one element, and your conclusion could vary widely. 

Webster defines accounting as the system of recording business and financial transactions and analyzing, verifying, and reporting the results.  This reinforces that accounting is not so much about the math, its about the process of recording and reporting.  That means we must exercise daily professional judgments in determining what and when to report. 

How can we help our customers navigate business decisions when the reporting implications have so many variables?  It is important to coach your customers to bring you into the conversation early.  This will help you get enough of the right information along the way to draw accurate conclusions about how to record and report the activities.   Participation in these conversations will also provide you an opportunity to help your customers make informed decisions.

When in doubt, make sure you get the facts, until then, well, it all depends.

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